Best States For Retirement

Many retirees choose to move away from their home states in search of lower cost of living, a milder climate, favorable tax regimes, or to be closer to family. There’s no one perfect formula for picking the best states for retirement, so we’ve pulled together a list of the five best states for retirees taking into account a number of qualities. You’ll notice that none of the country’s standard retirement locations are on our list as we believe retirees are looking for new options.

New Hampshire

For the frugal senior, New Hampshire has one of the lowest costs of living in the nation, at just 89% of the national average. New Hampshire is also the only state with no general sales tax and limited state income taxes (a 5% tax on dividends and interest income above $2,400 for individuals). A $1,200 tax exemption is available for residents 65 and older. The state collects no inheritance taxes, making New Hampshire desirable for retirees with large estates. However, since the state relies on property taxes for income, it has one of the highest median property tax rates in the country.

Seniors can feel safe with one of the lowest crime rates, as New Hampshire ranks 48th in crime. With just 13 murders reported in all of 2009, New Hampshire also has one of the lowest rates of violent crime.

Climate is the one area in which New Hampshire falls down, so bring lots of warm clothes. Temperatures typically range between -50 degrees in the depths of winter and 82 degrees in summer. It’s possible that all the cold weather has a salutary effect on health – residents have a life expectancy of 78.3 years. On the positive side, autumn in this rocky state is vibrant and spring is a well-earned reprieve from the cold.

Hawaii

Hawaii is known for its spectacular scenery and warm climate. Average monthly temperatures hover around 80 degrees all year, and the beach is never far away. A 2007 Harris Interactive poll ranked Hawaii as the number one best state for retirement among baby boomers.

However, prospective residents should make sure that their retirement plans are well-funded because the cost of living here is 167% of the national average and unemployment is over 6%. Part of this is simply the expense of shipping goods to the island, and the rest is due to high real estate costs.Tourism is one of the state’s major economic drivers, and property costs in popular destinations have skyrocketed.

While the islands are expensive, Hawaii boasts one of the rosiest tax pictures for retirees. Social Security, all government, and most private pension income is exempted from state taxes. However, if most of your income comes from other sources, beware; Hawaii has the highest top bracket income-tax of 11%.

While Hawaii is low in violent crime, it is ranked 3rd in the US for property crime, so seniors concerned about petty crime should consider living in one of the island’s many retirement communities or gated neighborhoods.

Hawaii is one of the healthiest places for seniors, with the highest life expectancy in the nation – 80 years.This might be because of Hawaii’s reputation as an active senior destination, with many outdoor activities for retirees.

South Dakota

South Dakota may not be the first place that comes to mind when thinking of the best retirement destinations, however, its low cost of living and low tax burden make it an excellent option for retirees trying to stretch their dollars farther.

The cost of living across the state is just 91% of the national average, and South Dakota can claim one of the lowest unemployment rates, thanks to the many corporations who make it their home due to its zero corporate income tax. Individuals are also exempt from state income taxes, including all retirement income, and residents pay just 4% in sales tax (prescription drugs are exempt from sales tax).

Real estate prices are well below the national average, with a 2009 median sale price of $132,000. While state property taxes are roughly average, all properties are assessed at 85% of their market value.

South Dakota is famed for its natural beauty: the state is home to Mt Rushmore, Badlands National Park, Devil’s Tower, and Walldrug. Residents of the state are active and healthy, claiming an average life expectancy of 77.7 years.

On the downside, South Dakota has a long and cold winter, with temperatures averaging just 16 degrees in January. On a positive note, all that cold weather has put a damper on crime – the state ranks 50th in property crime and just 46th in violent crime.

Utah

Utah is our pick of the West, with its beautiful scenery, moderate cost of living, and low violent crime rates. Seniors looking for a more urban experience might find Salt Lake City to their liking, while those craving small town living will find ample opportunities across the state. Wherever they live, they will experience Utah’s famed scenery – from the Great Salt Lake, to Bryce Canyon, to Arches National Park and many more.

The cost of living in Utah is 97% of the national average, with real estate making up a large part of the cost. Home to some of the best skiing in the country, Utah has a booming tourist real estate sector. The good news is the real estate prices vary widely across the state, and thrifty seniors will be able to find deals. Utah is not very tax friendly, as it recently adopted a 5% flat tax rate, does not exempt Social Security, and assesses property taxes at 100% of their value. However, seniors may be able to claim an income tax credit, and military retirees over 65 can exclude up to $7,500 in income each year.

Utah has one of the highest life expectancy’s in the country at 78.7 years. This might be because of the state’s reputation as a home for active, outdoors-oriented people. The arid climate is that of the high desert – hot and dry in the summer, with plenty of sunshine, and cold and dry in the winter. Skiing aficionados will love Utah’s famous dry mountain powder, which makes the state a world-class skiing destination.

Iowa

Iowa is a great Midwestern retirement location for its low cost of living, healthy economy, and high life expectancy (78.3 years). In a 2005 Money Magazine poll, retirees in Iowa named its high quality of life and small town values as their main reasons for choosing to live there.

Iowa has a very reasonable cost of living at 93% of the national average. Its tax environment is best described as mixed. Retirees are allowed to exclude up to $6,000 ($12,000 for married couples) of retirement-plan distributions from income calculations. Additionally, the state is phasing out Social Security benefit taxation. However, its top-tier tax is a painful 8.98%, and real estate is taxed at 100% of market value. Residents are eligible for a small homestead tax if they spend more than six months in-state each year.

Iowa has a standard Midwestern climate – wet and chilly in winter and hot and muggy in the summer. Temperatures average 17.8 degrees in January and 73.8 degrees in June. The state’s small town feel is borne out by its crime stats: it ranks 36th in the nation for property crime, and 32nd for violent crime.

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Disclaimer: This is not investment advice. All information on this site is intended for educational purposes only. We are not liable for any potential damages that may be incurred from this information. Always consult a licensed financial professional before investing.